Opportunity cost

The opportunity cost of an intervention is the cost that is foregone as a consequence of adopting a new intervention. In a fixed budget healthcare system where increased costs will displace services already provided, the opportunity cost is measured as the health lost as a result of the displacement of activities to fund the selected intervention. In terms of choosing to fund intervention A over intervention B, the opportunity cost of choosing A would be the potential value or the difference (incremental benefits) of  A compared with B and the difference in cost (incremental cost) of A compared with B. Often, when a new costly intervention is adopted within a health system, the opportunity cost (i.e. the health benefits displaced) will be unknown and unrelated to the intervention being adopted.